DOCSLIB.ORG

New Business Combinations Accounting Rules and the Mergers and Acquisitions Activity

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
New Business Combinations Accounting Rules and the Mergers and Acquisitions Activity NEW BUSINESS COMBINATIONS ACCOUNTING RULES AND THE MERGERS AND ACQUISITIONS ACTIVITY HUMBERTO NUNO RITO RIBEIRO Doctor of Philosophy DE MONTFORT UNIVERSITY LEICESTER BUSINESS SCHOOL November 2009 This copy of the thesis has been supplied on condition that anyone who consults it is understood to recognise that its copyright rests with its author and that no quotation from the thesis and no information derived from it may be published without proper acknowledgement. Leicester Business School, De Montfort University New Business Combinations Accounting Rules and the Mergers and Acquisitions Activity Humberto Nuno Rito Ribeiro Doctor of Philosophy 2009 Thesis Summary The perennial controversy in business combinations accounting and its dialectic with stakeholders’ interests under the complexity of the Mergers and Acquisitions (M&A) activity is the centrepiece of analysis in this thesis. It is argued here that the accounting regulation should be as neutral as possible for the economic activity, although it is recognised that accounting changes may result in economic effects. In the case of the changes for business combinations accounting in the USA, lobbying was so fierce that in order to achieve the abolition of accounting choice in M&A accounting, it forced the standard-setter to compromise and to change substantially some of its earlier proposals. Such fierce lobbying cast doubts about whether it was effectively possible to mitigate such economic effects, resulting in a possible impact of the accounting changes on the M&A activity. The occurrence of M&A in waves is yet to be fully theorised. Nevertheless, existing literature established relationships between M&A activity and some key economic and financial factors, and has provided several interesting theories and other meaningful contributions for this thesis. It was therefore possible to examine whether the changes in the accounting rules produced any significant impact on the M&A activity. The findings obtained from the testing of the research hypotheses suggest that the new M&A accounting rules did not result in significant impacts on overall M&A activity. Nevertheless, from the study of managers’ perceptions, and from the examination of annual reports of S&P 500 companies, a considerable impact on the financial reporting was found. Key words: Mergers and Acquisitions (M&A), M&A activity and waves, Accounting regulation, Economic consequences, Business combinations, Accounting choice, Pooling of interests method, Purchase method, Goodwill amortisation, Goodwill impairment 2 Dedication This thesis is dedicated to my family in Portugal and in Brazil, in thanks for their continuing support and encouragement during its preparation. Iria, Franklin, Stella, Nita, and godmother Lúcia, I love you all. 3 In memory of José Maria Pereira who could not live long enough to witness the accomplishement of this thesis. Many thanks for everything, may you enjoy eternal life. Post scriptum: I had the confirmation of my PhD on my Godfather’s first anniversary 4 Acknowledgements I would like to acknowledge in particular my director of studies, Professor David Crowther, Leicester Business School, De Montfort University, for his supervision and constant support. I also would like to acknowledge Peter Scott, De Montfort University, and Bode Akinwande, London Metropolitan University, for their advice during the development of the research; Maria Simatova, London Business School, for her assistance with data collecting and treatment; and Ken Westmoreland, London, and Rachel Alves, Chichester, for their continuous reviews; and, finally, Stuart Cooper, Aston University, and Ashok Patel, De Montfort University, for their substantive reviews. Finally, yet not least important I address my recognition to other friends and colleagues, anonymous referees, discussants and conference participants, which helped in some way to develop this major research undertaking. I also would like to acknowledge the funding for this research and for presentations in seminars and conferences obtained from the following programs and institutions: PRODEP, Ministério da Ciência e do Ensino Superior, Portugal and EU ESTiG, Instituto Politécnico de Bragança, Portugal Leicester Business School, De Montfort University, UK Fundação para a Ciência e a Tecnologia, MCTES, Portugal Fundação Calouste Gulbenkian, Portugal London Metropolitan University, UK Universidad del País Vasco, Spain The Institute of Chartered Accountants in England and Wales, UK Finally, I acknowledge the institutions that provided training and logistical support during the early stage of the research: Universidad de Santiago de Compostela, Spain Universidad Carlos III, Madrid, Spain 5 Contents Page Chapter 1 Introduction 16 1.1 Summary 16 1.2 The development of accounting theory and regulation 17 1.3 Ontology, theoretical identification and theory validation 31 1.4 Accounting, finance, and globalisation 35 1.5 Conclusions 38 Chapter 2 Political Nature of Accounting Standard Setting and Developments on Business Combinations Accounting 43 2.1 Introduction 43 2.2 Towards a regulated conceptual framework for accounting 44 2.3 Lobbying and political influences on standard setting 55 2.4 Business combinations in the USA: an under pressure accounting issue 67 2.5 Accounting choice and business combinations accounting 80 2.6 Lobbying and pressures on FASB’s new M&A accounting proposals 86 2.7 Conclusions 113 Chapter 3 M&A Activity and M&A Accounting 115 3.1 Introduction 115 3.2 Terminology and definitions 116 3.3 M&A activity pattern and M&A waves 118 3.4 New age for business combinations and goodwill accounting 129 6 3.5 Neutrality versus economic effects in M&A accounting 137 3.6 Possible impacts on M&A activity and M&A accounting 143 3.7 Conclusions 146 Chapter 4 Hypotheses 148 4.1 Introduction 148 4.2 M&A activity during the 2000-2002 period 150 4.3 M&A activity during the 1994-2008 period 157 4.4 Research methodology 159 4.5 Factors and theories explaining M&A activity 163 4.6 Reasons explaining M&A abandonment 167 4.7 Conclusions 171 Chapter 5 Survey and Financial Reporting Analysis 173 5.1 Introduction 173 5.2 Survey on companies’ reactions to the new M&A accounting rules 174 5.3 Analysis of annual reports 189 5.3.1 Methodology of analysis 190 5.3.2 Data sources 190 5.3.3 Data collection 192 5.3.4 SFAS 142 impacts sample 208 5.3.5 Basic descriptive statistics and analysis 212 5.3.6 Cross-sectional analysis 215 5.4 Conclusions 220 Chapter 6 Data Collection 223 6.1 Introduction 223 6.2 Data sources 224 7 6.3 M&A data selection 227 6.4 M&A sample 234 6.5 Data aggregation 236 6.6 Conclusions 243 Chapter 7 Models Development and Testing Results 244 7.1 Summary 244 7.2 Introduction 245 7.3 Construction of metrics 252 7.4 Statistical models for hypotheses testing 259 7.5 Variable definitions and predictions 264 7.6 Univariate descriptive statistics 276 7.7 Empirical tests and discussion of results 280 7.7.1 Bivariate analysis 280 7.7.2 Multivariate analysis 284 7.7.3 Outliers and influential points 303 7.7.4 Sensitivity analysis 312 7.7.5 Forecasting model validation 319 7.8 Conclusions 321 Chapter 8 Discussion and Interpretation 323 8.1 Introduction 323 8.2 Accounting regulation and accounting choice: an international perspective for business combinations 325 8.3 Accounting choice in business combinations accounting and M&A activity 336 8.4 New M&A accounting rules and M&A activity: business as usual? 342 8 8.5 Conclusions 344 Chapter 9 Conclusions and Further Research 346 9.1 Introduction 346 9.2 Limitations 347 9.3 Summary of main research and generalisation 350 9.4 Suggestions for further research 353 9.5 Contributions 354 References 359 Appendix A S&P 500 Companies List as of 31 December 2004 417 Appendix B Questionnaire Addressed to S&P 500 companies 430 Appendix C Crosstabulations for Questionnaire Data 431 Appendix D Goodwill and Other Intangible Assets (OIA), and Impact on Diluted EPS, by Industry 437 Appendix E Descriptive Statistics 438 Appendix F Pearson/Spearman Correlation Matrixes 442 Appendix G Regression Analysis for Hypotheses One and Two 446 Appendix H Residuals’ Autocorrelation Tables and Correlograms 453 Appendix I Durbin-Watson Distribution and Critical Values 467 Appendix J Plots for Normal Distribution of Residuals 469 Appendix K Outliers and Influential Points 475 Appendix L Sensitivity Analyses 487 9 Tables Page Table 3.1 Pro forma impact on EPS in 2001 of selected S&P 500 companies 145 Table 5.1 Estimated SFAS 142 impacts on diluted EPS by industry 216 Table 6.1 Summary of some major M&A data sources for the USA 225 Table 6.2 Sample description for the 2000-2002’s period 235 Table 6.3 Sample description for the 1994-2008’s period 236 Table 7.1 First lag autocorrelations and Durbin-Watson statistic values 294 Table 7.2 Key tests for residuals’ normality 299 Table 7.3 Tests for heteroscedasticity 303 Table 7.4 Outliers diagnostics 308 Table 7.5 Resume of samples for sensitivity analysis 315 Table 7.6 Regressions’ sensitivity to abnormal and non-trading day’s removals 316 Table 7.7 Sensitivity analysis using alternative event windows 317 Table 7.8 Out-of-sample accuracy measurement 321 Table 8.1 Accounting for business combinations worldwide in the 1990’s 327 Table 8.2 Accounting for M&A in Europe and in the USA: 1999-2000 332 10 Table C.1 Crosstabulation for SFAS 141 and IT & Financials industries 431 Table C.2 Crosstabulation for SFAS 142 and IT & Financials industries 432 Table C.3 Crosstabulation for SFAS 141 and IT industry 433 Table
Load more

Recommended publications
  • History of Accounting Development
    Journal of History Culture and Art Research (ISSN: 2147-0626) Tarih Kültür ve Sanat Araştırmaları Dergisi Vol. 6, No. 4, September 2017 Revue des Recherches en Histoire Culture et Art Copyright © Karabuk University http://kutaksam.karabuk.edu.tr ﻣﺠﻠﺔ ﺍﻟﺒﺤﻮﺙ ﺍﻟﺘﺎﺭﻳﺨﻴﺔ ﻭﺍﻟﺜﻘﺎﻓﻴﺔ ﻭﺍﻟﻔﻨﻴﺔ DOI: 10.7596/taksad.v6i4.1163 Citation: Mukhametzyanov, R., Nugaev, F., & Muhametzyanova, L. (2017). History of Accounting Development. Journal of History Culture and Art Research, 6(4), 1227-1236. doi:http://dx.doi.org/10.7596/taksad.v6i4.1163 History of Accounting Development Rinaz Z. Mukhametzyanov1, Fatih Sh. Nugaev2 Lyaisan Z. Muhametzyanova3 Abstract Everyone is well aware that accounting is one of the most important areas of economy, which has become so widespread in our lives today that it is impossible to imagine modern business and economy without this component. Accounting is a well thought out system that reflects the movement of various facts of economic life, no matter how different they are, and leads them into a common logical system. We can talk a lot about the features and possibilities of this science, but how often do we think about the ways this system arose, the ways of its development and becoming a separate science? During the study of this problem, an attempt was made to systematize various points of view regarding the origin and the development of accounting. After the result of the analysis, the authors identified regularities in the development of accounting and its methodical apparatus associated with the periodization of history on technological structures. Keywords: History of accounting development, Sources of accounting, Accounting, Techno- economic paradigm.
    [Show full text]
  • ACCOUNTING and AUDITING in ROMAN SOCIETY Lance Elliot
    ACCOUNTING AND AUDITING IN ROMAN SOCIETY Lance Elliot LaGroue A dissertation thesis submitted to the faculty at the University of North Carolina at Chapel Hill in partial fulfillment of the requirements for the degree of Doctor of Philosophy in the Department of History. Chapel Hill 2014 Approved by: Richard Talbert Fred Naiden Howard Aldrich Terrence McIntosh © 2014 Lance Elliot LaGroue ALL RIGHTS RESERVED II ABSTRACT Lance LaGroue: Accounting and Auditing in Roman Society (Under the direction of Richard Talbert) This dissertation approaches its topic from the pathbreaking dual perspective of a historian and of an accountant. It contributes to our understanding of Roman accounting in several notable ways. The style and approach of Roman documents are now categorized to reflect differing levels of complexity and sophistication. With the aid of this delineation, and by comparison with the practices of various other premodern societies, we can now more readily appreciate the distinct attributes present at each level in Roman accounting practices. Additionally, due to the greater accessibility of Roman accounting documents in recent years – in particular, through John Matthews’ work on the Journey of Theophanes, Dominic Rathbone’s study of the Heroninos archive, and the reading of the Vindolanda tablets -- it becomes easier to appreciate such differences among the few larger caches of accounting documents. Moreover, the dissertation seeks to distinguish varying grades of accountant. Above all, it emphasizes the need to separate the functions of accounting and auditing, and to gauge the essential characteristics and roles of both. In both regards, it is claimed, the Roman method showed competency. The dissertation further shows how economic and accounting theory has influenced perceptions about Roman accounting practices.
    [Show full text]
  • 1 the Genesis of Double Entry Bookkeeping Alan Sangster, Griffith University, Aust
    The Genesis of Double Entry Bookkeeping Alan Sangster, Griffith University, Australia ABSTRACT This study investigates the emergence in Italy early in the 13th century, if not before, of a new form of single entry bookkeeping which, thereafter, gave rise to the variant form we know as double entry bookkeeping. In doing so, it considers both primary and secondary sources and the language of bookkeeping at that time, along with its suitability for the purpose to which it was being put; and compares the new form of single entry to that of double entry, pinpointing the single factor necessary to convert the former into the latter. Contrary to the findings of previous investigations and the assumptions made in the literature concerning its origins linked to trade, both of which indicate that double entry was an invention of merchants, this paper concludes that the most likely form of enterprise where bookkeeping of this form would have started is a bank. And, as the one form of business for which knowing your debtors and creditors is fundamental to survival, it is the obvious and by far the most likely activity from which detailed single and then double entry bookkeeping emerged. Key words: single entry bookkeeping; double entry bookkeeping; bank accounts; merchant accounts; medieval accounting practice. BACKGROUND This study was prompted by the recent publication of a best-selling book which has popularized the history of double entry bookkeeping (Gleeson-White, 2011). In its title – Double Entry: How the Merchants of Venice Shaped the Modern World and How their Invention could Make or Break the Planet – the author tells us that merchants invented double entry bookkeeping.
    [Show full text]
  • Accounting in Ancient Times: a Review of Classic References
    Accounting in Ancient Times: A Review of Classic References (*) Assist. Prof. Dr. Roberta Provasi University of Milan, Italy Prof. Dr. Shawki Farag The American University in Cairo, Egypt Abstract European accounting scholars have made significant contributions to the history of accounting. Some of these contributions were not translated into English and as such were not integrated in the evolving comprehensive coverage of the evolution of the accounting function. The purpose of this research is to review the works of those scholars in the context of the ancient history of civilizations. The research starts with the oldest texts known which are dated to the end of the fourth millennium BC (3200-3100). These were sequences of pictographic signs, which represent the antecedents of the direct cuneiform writing, engraved on clay tablets found in the monumental temple district dell’Eanna of the city of Uruk, in southern Iraq. The content of these textsare of a primarily administrative: lists of goods in and out of rations distributed to employees, etc.. The writing is in response to the demands of an administrative system, developed in a centralized economy with strong redistributive character.It was governed by an elite priesthood, (*) Bu bildiri, 19-22 Haziran 2013 tarihlerinde İstanbul’da organize edilen III. Balkanlar ve Ortadoğu Ülkeleri Muhasebe ve Muhasebe Tarihi Konferansı’nda sunulmuştur. 68 which was formed in southern Mesopotamiaas a resultofthe so-called “urban revolution”. The system of signsengraved on the tablets (about 1200) was already fully formed, and, as such, has no direct antecedents. In a broader sense, however, it represents the end of a long process of developing accounting systems and management of there serves,the beginnings of which date back to Neolithic period and there for eat the time of the first agriculturel villages.This acounting systems prehistoric werw based essentially on two instruments:accounting tokens and theseals.
    [Show full text]
  • History of Accounting; Some Perspectives on the Nigerian
    HISTORY OF ACCOUNTING: SOME PERSPECTIVES ON THE NIGERIAN SITUATION Loveday A. Nwanyanwu Abstract This paper discusses the history of accounting, it traces the methods adopted for recording business and financial activities from the ancient era through the periods of the Merchants of Venice in 1370, the Sumerian civilization of 5.000 years ago to the period of industrial revolution which sprang up in England between 1700 and 1785. Some developing countries including Nigeria are covered. It is discovered that modern bookkeeping developed in 1494. when Luca Pacioli, an Italian mathematician and friar published a treatise on double entry bookkeeping. Pacioli's work marked a turning point in the history of accountancy. It led to early education in accountancy and within the first century of its publication, the book was translated into five different languages. The growth in business and commercial activities between IS1'1 and 21st century has brought challenges to practitioners, scholars and philosophers in the field of accountancy. Contemporary thinking in accountancy is on mechanized procedure, adopting the use of computers for efficiency, accuracy, and timeliness in the production of information for business decisions. Introduction "Man's records, if any of his early undertakings are vague and often remote: a broken piece of cla\ \\ith inscriptions, a picture on the wall of a cave, or a partially destroyed skin. Interpreting these findings is frtquenlly as troublesome as discovering them in the first place (George Jr. 1972, P.I), Accounting is a branch of management science that is concerned with recording, analysing and interpreting financial transactions to users and other interested parties.
    [Show full text]
  • The Routledge Companion to Accounting History Historiography
    This article was downloaded by: 10.3.98.104 On: 24 Sep 2021 Access details: subscription number Publisher: Routledge Informa Ltd Registered in England and Wales Registered Number: 1072954 Registered office: 5 Howick Place, London SW1P 1WG, UK The Routledge Companion to Accounting History John Richard Edwards, Stephen P. Walker Historiography Publication details https://www.routledgehandbooks.com/doi/10.4324/9780203871928.ch2 Christopher J. Napier Published online on: 21 Jul 2008 How to cite :- Christopher J. Napier. 21 Jul 2008, Historiography from: The Routledge Companion to Accounting History Routledge Accessed on: 24 Sep 2021 https://www.routledgehandbooks.com/doi/10.4324/9780203871928.ch2 PLEASE SCROLL DOWN FOR DOCUMENT Full terms and conditions of use: https://www.routledgehandbooks.com/legal-notices/terms This Document PDF may be used for research, teaching and private study purposes. Any substantial or systematic reproductions, re-distribution, re-selling, loan or sub-licensing, systematic supply or distribution in any form to anyone is expressly forbidden. The publisher does not give any warranty express or implied or make any representation that the contents will be complete or accurate or up to date. The publisher shall not be liable for an loss, actions, claims, proceedings, demand or costs or damages whatsoever or howsoever caused arising directly or indirectly in connection with or arising out of the use of this material. Downloaded By: 10.3.98.104 At: 03:19 24 Sep 2021; For: 9780203871928, chapter2, 10.4324/9780203871928.ch2 First published 2009 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN Simultaneously published in the USA and Canada by Routledge 270 Madison Avenue, New York NY 10016 Routledge is an imprint of the Taylor and Francis Group, an informa business This edition published in the Taylor & Francis e-Library, 2009.
    [Show full text]
  • Accounting and Auditing History
    2 Accounting and Auditing History: Major Developments in England and the United States from Ancient Roots Through the Mid-Twentieth Century1 Howard Stettler Professor Emeritus, University of Kansas Summary The history of accounting and auditing, as inextricably entwined disciplines concerned with the communication of information about economic events affecting governmental or private entities, is traced from the beginning of recorded history to recent times. Both disciplines have developed as a response to emerging needs of the times, and both have facilitated the development of capital markets that have supplied the tremendous amounts of capital to satisfy the demand that was an outgrowth of the Industrial Revolution. Closely associated with the development of the two disciplines has been the emergence of the accounting profession, playing a key role in more recent times in advancing the state of the art in both professional practice and in the development of accounting and auditing standards. The following chronological synopsis of major developments in accounting and auditing constitutes the framework for the more extensive treatment the paper gives to the evolution of the two disciplines. The rationale underlying these developments is likewise considered. Major Developments Principal Causes Means of communication Communal activities Writing Need for a record of economic goods Accounting and auditing Accountability for tribute exacted by ruling authority Accounts of transactions with others Economic benefits of trading activity and
    [Show full text]
  • Chapter 2 the History and Development Of
    CHAPTER 2 THE HISTORY AND DEVELOPMENT OF MANAGEMENT ACCOUNTING 2.1 INTRODUCTION The previous chapter defined the research problem and stated the main hypothesis for the study, namely that management accountants may not be able to contribute fully to the strategic management process in the future, as the skills required and displayed by management accountants do not meet the needs of the changing business environment. This hypothesis also indicates a growing gap between current tertiary management accounting education and the future requirements of management accounting practice. A thorough understanding of the history and development of management accounting is required before the gap between education and practice can be investigated. Moreover, knowledge of the history of management accounting will facilitate an understanding of the future of this profession. As Plato said in 370 AD: … and thus, the tale (history) was preserved, and did not perish; and it may also preserve us, if we will listen to its warnings; in which case we shall pass prosperously across the river … and during the journey of a thousand years which we have described we may never cease to prosper (Plato 370AD) This chapter firstly highlights the difference as well as the interdependence between management accounting and financial accounting. The focus then shifts to historical developments in both these fields. Thirdly, the professional status of the management accountant is addressed as the study is relevant to practising management accountants. Finally, as the research for this study revolves around 10 the current status of management accounting in South Africa, its history and development -- although limited -- will be investigated.
    [Show full text]
  • Studies in the History of Accounting
    STUDIES ‘IN THE HISTORY OF ACCOUNTING Studies in the History of Accounting Edited on behalf of The Association of University Teachers of Accounting and the American Accounting Association by A. C. LITTLETON, Ph.D. Emeritus Professor of Accounting, University of Illinois and B. S. YAMEY, B.Com. Reader in Economics, London School of Economics and Political Science, University of London 1956 RICHARD D. IRWIN, INC. HOMEWOOD, ILLINOIS Published in the United States of America (©) 1956 by Richard D. Irwin, Inc. Published in Great Britain by Sweet & Maxwell Ltd. of 2 & 3 Chancery Lane London — Law Publishers Printed in Great Britain by The Eastern Press Ltd. of London and Reading Preface MODERN accountancy differs from most branches of professional activity in that one of its major techniques—double-entry book- keeping—goes back as far as the fourteenth, perhaps even the thirteenth, century. This technique has proved to be serviceable and effective in the changing circumstances and with the changing business requirements of over five centuries. It has also had an intellectual interest sufficient to attract the active attention down the centuries of distinguished mathematicians and scientists such as Luca Pacioli, Simon Stevin, Charles Hutton and Augustus de Morgan. It is one of the objectives of this book to iJumine some aspects of the long history of double entry. Its early origins as revealed in surviving accounting records; some of its earliest expositors, their eminence and achievements in wider fields, and their treatises on accounting; the evolution of particular practices associated with double entry; the methods of teaching double entry and the emergence of theories of accounting; the spread of the practice—these are among the subjects considered in this collection of studies.
    [Show full text]
  • Luca Pacioli's Double-Entry System of Accounting
    Research Journal of Finance and Accounting www.iiste.org ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online) Vol.6, No.18, 2015 Luca Pacioli’s Double-Entry System of Accounting: A Critique. Adum Smith Ovunda Rivers State University of Science and Technology, P. M. B. 5080 Nkpolu Oroworukwo, Port Harcourt, Nigeria. Abstract What we know today as double entry bookkeeping is traceable to a man called Luca Pacioli, the author of the world’s first printed book-keeping treatise. As the origin of all subsequent book-keeping treatises throughout Europe, Luca Pacioli’s book-keeping tract is not only the source of modern accounting, but also ensured that the medieval Venetian method itself survived into our times. However, this study is aimed at critically examining the emergence of the double entry system of accounting by reviewing what past scholars and researchers have done in relation to the subject matter. This is to say that a comprehensive review of accounting literature in relation to double entry system of accounting was carried out to do justice to this study. And it was gathered that double entry bookkeeping existed amongst the early Italian merchants before Pacioli came into the scene. But the practice prior to the fourteenth and fifteenth centuries was rather crude because there were no formally documented principles to be followed. So the outburst of Pacioli in the fifteenth century recorded a landmark in the development of this all-embracing accounting system. The first ever published treatise about double entry bookkeeping was that of Luca Pacioli in his book titled “Summa de Arithmetica, Geometria, Proportioni et Proportionalita”.
    [Show full text]
  • The Development of Accounting Through the History
    ISSN: 2278-3369 International Journal of Advances in Management and Economics Available online at www.managementjournal.info REVIEW ARTICLE The Development of Accounting through the History Mohamud Ambashe1, Hikmat A Alrawi2* 1Al-Itahad University, United Arab Emirate, UAE. 2Dept. Chair Finance and Accounting,City University College of Ajman, UAE. *Corresponding Author: Email: [email protected] Abstract This paper seeks to further advance our increasing knowledge of the history of accounting outside English-speaking countries in periods earlier than the modern era. It also contests de Ste. Croix's claim (1981) that "there seems to have been no really efficient method of accounting, by double or even single entry, before the thirteenth century". Analysis of medieval bookkeeping systems in Muslim society throws doubt on this assertion Keywords: Accounting history, Accounting development, Double entry accounting. Introduction Accounting is an information system that centralize the religion of Babylonia in the temple identifies records communicates the economic of Merodach at Babylon, and while he had thus events of an organization to interested users. The alienated the local priesthoods, the military party writing of accounting history is increasingly despised him on account of his antiquarian tastes. dominated by writers in English discussing He seemed to have left the defense of his kingdom private-sector accounting in English speaking to others, occupying himself with large chanks of countries of the 19th and 20th centuries the land covering more than 2000 hectors of land scope of accounting history is much wider than where he controlled and governed for period this . This paper seeks to further advance our between 2017- 2035 BC, the said land was used increasing knowledge of the history of accounting for agriculture by use of river Mesopotamia [2].
    [Show full text]
  • Download This PDF File
    Journal of Markets & Morality Volume 22, Number 1 (Spring 2019): 41–65 Copyright © 2019 Accounting and the Auditing Function in Economic History: Transaction Costs, Trust, and Economic Robert A. Black Professor of Economics * Progress Houghton College This article introduces the auditing function in historical perspective as a solution to principal-agent problems that emerged as commercial partnerships grew and as corporations arose later. The early history of modern accounting coincides with the rise of international business in Europe and public accounting emerges after the rise of the corporate form of business. The treatment herein focuses first on the history of mainly private late-medieval accounting to assess the profitability of a privately owned company and then on the more recent role of accounting in assuring the accuracy of the financial reports of publicly traded corporations. The article highlights the economic value and the social function of private financial accounting and public auditing. While closely related in form, public accounting is distinctly different in philosophy and in its key purpose of reconciling diverse investing interests. This article compares the different frames of mind between purely private accounting and public accounting, while recognizing the social contributions of each. It also responds to objections to including accounting programs in the liberal-arts tradition by explaining why accounting fits well in the history of economic progress and in a program of instruction in civic and moral virtues. It concludes that the auditing function of public accounting plays an essential role in modern free-enterprise economies with their large publicly owned corporations. Introduction “We shouldn’t teach accounting here at this college,” claimed a former colleague at another school.
    [Show full text]